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Below the Perspective by Ms. Anitha Rangan, Economist, Equirus on  RBI Monetary Policy Announcement 

While in line with consensus RBI has kept its policy rate unchanged, in view of the surplus liquidity and perhaps to deliver an implicit hike (of lesser impact), RBI has temporarily increased the CRR levels by 10% of incremental NDTL of banks. This in effect takes out the 10% of surplus in the accumulated from INR 2000 note withdrawal and FX operations (~INR 300-350 bn). Notably, inflation estimates, especially near term estimates (Q2, Q3) have been revised upwards meaningfully, while growth estimates are retained. Furthermore, Q1FY25 inflation estimate of 5.2% and governor reiterating, commitment to align to 4% on a durable basis, suggests that rate cuts are out of way beyond the near term. Higher for longer is not just for the external world but also for India. Domestic growth resilience is countered by external risks and inflation. RBI is not ruling out hikes if necessary, clearly cuts are out of sight.

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